Battle Is Looming Over Plan to Raise ‘Sin Taxes’ : Politics: Industries protest, citing current levies. But linking hikes to health reform may draw public support.

President Clinton’s apparent preference for raising “sin taxes” to pay for universal health care returns the federal government to the revenue stream from which it has fished for many years.

And while “sin taxes” may enable the Administration to avoid the politically risky proposition of taxing employee health benefits, they are by no means an easy source of money. Federal taxes are already levied on each of the products that government officials have mentioned so far--tobacco, alcohol, guns and ammunition--and each is produced by an industry with powerful lobbies, not to mention vocal consumers.

The talk “is making lots of people nervous--not just us, but anybody who’s a potential target,” Walker Merryman, a Tobacco Institute spokesman, said Thursday. “Our mission is to vigorously defend the interests of our members and their 50 million customers.”

The federal government currently levies a 24-cent per pack excise tax on cigarettes, up from 20 cents since Jan. 1. In the last 10 years, the tax has tripled, Merryman said. States also levy an excise tax on cigarettes, ranging from 2 cents per pack in Virginia to 51 cents in Massachusetts, he said.

The liquor industry also says that its customers are paying enough already. According to Elizabeth Board of the Distilled Spirits Council, the industry is paying $3.9 billion in federal taxes and $8 billion in state taxes annually, making liquor “the most heavily taxed consumer product in the country.”

And according to a Beer Institute official, the beer industry paid $7.8 billion in federal, state and local taxes last year.

Guns and ammunition also already carry hefty taxes, with purchasers paying a federal excise tax of 10% on handguns and handgun ammunition and 11% on rifles, shotguns and corresponding ammunition.

Under the 1937 legislation, the funds are disbursed among the states for wildlife restoration, industry officials said. The act has raised more than $2.4 billion through 1992, according to a National Rifle Assn. spokesman.

Mindful of the looming storm over attempts to raise any of those taxes, the Administration decided against incorporating them into the President’s economic package released last week, choosing instead to link them directly to health care reform--a strategy that many expect will tap into a well of public support.

As the President said Thursday: “I think we are spending a ton of money in private insurance and government tax payments to deal with the health care problems occasioned by health habits, and particularly smoking. It’s costing us a lot of money.”

Glenn Meister, a Los Angeles-based analyst at Foster Higgins, a large benefits-consulting firm, said that linking the two “would be well-received. People in general feel that Americans are out of shape, smoke, drink too much.”

According to an American Medical Assn. study out this week, unhealthful behavior and lifestyles cost more than $171 billion a year.

“Violence, drugs, alcohol and tobacco are wreaking havoc on our health system,” said Dr. Daniel Johnson Jr., speaker of the AMA’s House of Delegates.

Congress’ Joint Committee on Taxation has estimated that doubling the tobacco tax to 48 cents a pack could net about $35 billion a year in new revenues. The Joint Committee on Taxation has estimated that raising the tax on alcohol to $16 per gallon could yield about $4.7 billion.

Tax hikes aside, encouraging more healthful lifestyles itself is a no-lose proposition, promising to reap enormous health care savings in the long run, as much of corporate America already has discovered.

Johnson said that each year tobacco use accounted for 500,000 deaths and $22 billion in health spending, alcohol consumption accounted for 100,000 deaths and $85.5 billion, and drug abuse cost $58.3 billion for care, treatment and rehabilitation as well as for lost productivity and crime enforcement.

“Every person can make a difference in battling runaway costs by adopting a healthier lifestyle,” he said.

And if the Administration seeks to raise the excise tax on handguns and ammunition, it may well find surprising GOP support, particularly from the likes of Sen. John H. Chafee of Rhode Island, a Republican leader on health care issues.

Chafee is also a longtime gun control advocate and puts the overall cost of firearms injury to the health care system at “more than $4 billion.”

Critics of “sin taxes” also are quick to note its regressive nature, meaning that it hits those with lower incomes harder. But in a way, that’s precisely the point, according to Robert Blendon of Harvard University.

A higher cigarette tax, for instance, would have a special deterrent effect on the young--those with the least amount of disposable income. “Teen-agers are the most sensitive to sin taxes,” he said. “Taxes do modify people’s behavior.”

That point also is not lost on health care reformers or public health analysts: The lower the consumption of liquor, beer and tobacco, the healthier the populace.

Since the early 1980s, many of the nation’s large employers also have been deploying a variety of incentives to encourage more healthful behavior among employees.